EVI INDUSTRIES, INC. (EVI) stock intrinsic value fair value estimate & owner earnings analysis

EVI Industries is a Miami-based value-added distributor of commercial laundry equipment. It sells, leases, installs and services washers, dryers, tunnel systems, finishing lines and boilers for laundromats, hotels, hospitals, institutions and industrial laundries - about 55,000 customers, mainly in the United States, with some sales to Canada, the Caribbean and Latin America. Roughly 71% of its purchases come from four manufacturers. Since 2016 it has grown mainly by buying regional distributors, lifting revenue from $36 million in fiscal 2016 to $447 million in fiscal 2026 (year ended June 30). On September 1, 2026 it paid $37.4 million in cash for Sudsies, a South Florida dry-cleaning and garment-care business and its first move outside laundry equipment distribution. How we measured earnings. We start from operating cash flow, remove swings in working capital (large here, because inventory, customer deposits and receivables move with project timing), and treat stock compensation (about $5.3 million in fiscal 2026), credit-loss and inventory reserves, and the capital spending needed to maintain the business as real costs. Amortization of acquired customer relationships (about $3.1 million a year) is not charged, because it writes down past purchase prices rather than consuming cash; the risk that acquired relationships fade is carried in the bear case instead. On this basis owner earnings per share were $0.40 in fiscal 2017, $0.08 in the 2020 COVID year, $1.05 in 2023, $0.55 in 2024, $0.69 in 2025 and $0.79 in 2026. Adding back interest paid gives the cash the business generates before its lenders: $1.07 per share in fiscal 2026, up 22% from $0.88 in 2025. Starting level. EVI is meaningfully larger after spending $47 million on acquisitions in fiscal 2025, so older per-share figures understate today's business. We took the median pre-interest cash margin of the last five years (fiscal 2022-2026: 2.3%, 4.5%, 2.9%, 3.0% and 3.3%; median 3.0%) and applied it to fiscal 2026 revenue. That gives about $13.2 million, or $0.97 per share - below fiscal 2026's $1.07, and a window that includes both the supply-chain-disrupted 2022 and the unusually strong 2023. Debt. At June 30, 2026 EVI owed $51.0 million on a bank revolving credit facility that matures March 26, 2030, at a floating rate averaging 5.24%, with leverage and interest-coverage covenants it met at year end. It then paid $37.4 million for Sudsies, which year-end cash of $6.8 million could not cover, so we treat the company as owing about $88.4 million. The $6.8 million of cash is treated as needed to run the business. Base case: $11.45 per share. The core distribution and service business earns $13.2 million before interest and keeps doing what it has done for a decade: reinvesting about a third of its cash in small acquisitions of regional distributors. Average yearly pre-interest cash flow rose by about $7 million between fiscal 2018-2020 and fiscal 2024-2026 while about $82 million was spent on acquisitions in fiscal 2019-2025, a return of roughly 8% at best (some of that growth was organic and some deals were paid in stock). We therefore credit 2.8% yearly growth for ten years, with only two-thirds of the cash available to owners, then flat earnings with no growth through year 40, supported by a company incorporated in 1963 and an installed base of equipment that needs parts, service and eventual replacement. That 2.8% first-year growth is far below the 22% rise in per-share pre-interest cash flow in fiscal 2026. Sudsies is valued at the $37.4 million paid, because its results have not yet been reported. The business is worth about $244 million, owes about $88 million, and leaves about $156 million for shareholders, or $11.45 per share. Bear case: $2.48 per share. The pre-interest cash margin settles at 2.2% of fiscal 2026 revenue (about the level of fiscal 2021 and 2022, though well above the 1.0% of the 2020 COVID year), or about $9.8 million, and then shrinks 2% a year for 25 years as acquired customer relationships fade or one of the four major manufacturer lines is lost, with no further acquisitions. Sudsies proves worth half what was paid; it brings exposure to contamination from perchloroethylene, the solvent historically used in dry cleaning, which the company flags as a risk. The business is worth about $122 million against $88 million owed, leaving about $34 million, or $2.48 per share. Interest of roughly $4.6 million at today's rate would still be covered about twice. Bull case: $16.67 per share. Pre-interest cash flow holds at fiscal 2026's $1.07 per share (a 3.3% margin), half is reinvested in tuck-in acquisitions earning 9% for ten years (4.5% yearly growth), and earnings then hold flat indefinitely. The business is worth about $315 million, owes $88 million, and leaves $16.67 per share. What changed since our August 2026 estimate. The base value rises from $8.90 to $11.45 and the bear value from $0 to $2.48, while the bull value falls from $20.63 to $16.67. The fiscal 2026 annual report, filed in September 2026, showed higher cash earnings. We now value every company at the same 6% rate and express risk through the cases rather than through a higher rate. We now also count the $37.4 million Sudsies payment as debt, and we credit acquisition growth only to the extent the business pays for it out of its own cash. The bull value falls because we no longer assume 11% yearly growth sustained for a decade. What would make this wrong: a downturn in hotel, healthcare or laundromat equipment spending like 2020; loss of a major manufacturer's distribution rights; acquisitions bought at higher prices that earn less; or Sudsies, a consumer business new to management, needing more capital or environmental cleanup than expected. Diluted shares grew from 9.5 million in fiscal 2017 to 13.6 million in fiscal 2026, partly from stock issued in acquisitions and stock awards; we charge stock pay as a cost, but future share issuance for deals would dilute these values. The margin-of-safety price of $6.25 sits about 45% below the base value, reflecting the debt, the cyclical exposure to customers' equipment budgets, and the untested garment-care segment.